What's Behind Fox's Unique Play to Create a TV Powerhouse

Marc Graboff

Fred Prouser/Reuters/Corbis

An insider says a four-person management structure is being worked out for the new venture, with a committee consisting of Shine's Alex Mahon, Endemol's Tim Hincks and Just Spee and CORE's Marc Graboff.

Rupert Murdoch endured accusations of nepotism in 2011 when News Corp. paid $673 million for Shine Group, a U.K. producer of Biggest Loser that was about 80 percent owned by daughter Elisabeth Murdoch. Three years later, Shine, now an asset of Rupert's 21st Century Fox, could be at the center of a major deal.

21st Century Fox acknowledged May 15 that it has a preliminary agreement to create a joint venture by combining Shine with Big Brother producer Endemol and American Idol parent CORE Media Group, both of which are affiliates of Apollo Global Management, a private equity firm with $125 billion in managed assets. While Fox stresses that "there can be no assurance that the proposed transaction will be completed," an insider says a four-person management structure already is being worked out for the venture. The committee would consist of Shine CEO Alex Mahon and Endemol Group president Tim Hincks, both in London; Endemol CEO Just Spee in Amsterdam; and CORE president Marc Graboff in Los Angeles.

"It will create a big TV production powerhouse with scale and a true international focus, as opposed to the international operations being an outpost of a U.S.-based media giant," says the insider. The hard part will be the merging of three companies with three separate cultures and working for two owners, Fox and Apollo. If consummated, the deal would be the largest in a recent string of similar arrangements: Discovery Communications and Liberty Global said May 8 that they will form a joint venture that will acquire All3Media in the U.K., and ITV said May 6 that it would pay $360 million for an 80 percent stake in Pawn Stars producer Leftfield Entertainment.

"Everyone wants original programming," says analyst Steven Birenberg of Northlake Capital Management. "Warners, CBS, Fox and Lionsgate all have profitable and growing TV production businesses, and the value of those -- and independents like Endemol and All3Media -- are rising."